Sheldon Adelson May Have Lost On His Political Investments In The US But He's Killing It In Israel

If Adelson represents in 2012 the new face of
unlimited political ‘speech’ in US Politics following
the Citizens Unitedruling, he’s even further along
in influencing Israeli politics. My friend The Professor
presents a fuller picture of Adelson than I had painted
earlier with
his rational bet on the Romney campaign]

By: “The Professor”

In a post earlier this month, The Banker analyzed the personal
financial math behind Sheldon Adelson’s vow to double down on his
(losing) bets on Republican political candidates in the next
round of elections, presenting a convincing case that any
monetary investment Adelson might make in candidates who support
his views on tax policy would be amply rewarded were enough of
those candidates to win to make those policies a reality.

However, The Banker ignored Adelson’s stated primary reason for
supporting Republican candidates, which has nothing at all to do
with tax policy. In an
op-ed in the Wall Street Journal published days before
the presidential election, Adelson dismissed the claim that his
support for Republicans was the result of the “conservative
caricature” of him as a tax-evading oligarch and insisted that it
stemmed from the fact that “the Democratic Party has changed in
ways that no longer fit with someone of my upbringing.” His
primary evidence of this change? His claim that more
Republicans than Democrats “sympathize with Israel” (for which he
provides an uncited statistic), which he calls the “sole liberal
democracy in the region.”

It seems to me that The Banker’s account of Adelson’s rationality
in betting on Republican candidates is undercut by Adelson’s
wholly financially irrational commitment to influencing both the
American-Israeli relationship and, more importantly, domestic
Israeli politics. Setting aside the question of whether a
country that arrests women for praying openly in public places
and allows religious authorities to control questions of
citizenship and marriage can be considered a liberal democracy,
Adelson’s involvement in Israeli politics and his unqualified
support for Benjamin Netanyahu (hereafter known as Bibi, which is
how he’s pretty much exclusively referred to in Israel) defies
both financial logic and his supposed commitment to Israel as a
“liberal democracy.”

In July 2007, a new daily newspaper debuted in Israel.
Called Yisrael Hayom, or “Israel Today,” it was
(and is) bankrolled by Sheldon Adelson and distributed for free
around the country. By 2010, only three years after its
inception, it had
a circulation of over 350,000 and by 2011 had surpassed
all other daily newspapers in Israel in its share of readership.

According to the Israeli business site Globes, Adelson lost 250
million NIS (about $70 million) on the paper from
2007-2010. While this amount is considerably less than what
Adelson spent in just the current election cycle in the United
States, it nonetheless represents a significant chunk of
change. More importantly, what Adelson bought with his
investment is somewhat more significant than what he got out of
the last U.S. election cycle.[1]

With a 40% share of the Israeli newspaper market, Adelson now has
the ear of the Israeli public, and has caused a crisis in Israeli
journalism, with the third and fourth most popular papers in
Israel, Ma’ariv and Ha’aretz,
facing serious questions about their futures.[2]

Yisrael Hayom’s dominance of the Israeli newspaper
market has raised two serious questions in Israeli politics, both
of which impinge on the liberal democratic character of Israel
that Adelson himself extols: first, whether Yisrael
Hayom, which has a clear ideological bent (Americans need
only know that the day after the most recent presidential
election the
headline on the front page read, “The U.S. chose
socialism” to know what that ideological bent is, at
least with regard to American politics), is constraining public
political discourse with its dominance of the newspaper market, a
dominance won through free distribution and lower advertising
rates. Second, whether the money Adelson has poured
into Yisrael Hayom essentially amounts to a
shadow contribution to Bibi’s campaign coffers, since the paper
offers propagandistic and one-sided support to Netanyahu and his
policies.

Ehud Olmert, then still the prime minister of Israel, accused
Adelson of political purposes in starting the paper
and of
supporting Netanyahu when he was still the opposition
leader. In Israel, Yisrael Hayom is
commonly referred to as “Bibiton,” a portmanteau word that
basically means “Bibi’s paper,” and writers and editors at the
paper have strong ties to (and have sometimes been simultaneously
employed by) the prime minister’s office under Netanyahu.[3]

There’s no question that Adelson is losing considerable amounts
of money on Yisrael Hayom, and that his goal is to
advance (perhaps to the exclusion of all others) the political
viewpoints of Bibi Netanyahu and his government.

The political positions with which Bibi is now synonymous have
two components: international and domestic.

Internationally, Bibi is a hawk who has advanced policies that
have solidified the continued Israeli occupation of Palestinian
territories, despite voicing his ostensible support for a
two-state solution. His government’s recent declaration of
their intention to begin building in the disputed territory
around Jerusalem known as E1, presumably in retaliation for the
successful Palestinian bid for upgraded status at the U.N., is
recent evidence of this policy.

Domestically, since his first stint as prime minister in the
1990s and his later turn as Finance Minister in the early 2000s
(a post from which he resigned in protest against the unilateral
Israeli withdrawal from Gaza overseen by Ariel Sharon), Bibi has
been in favor of a variety of “pro-market” financial reforms that
have been largely credited with strong Israeli growth even at
times of international financial crisis but have also been
largely reviled by the general Israeli public. These
include the reduction of income-tax rates, particularly for
corporations and high earners, and the privatization of
state-owned corporations. Public opposition to these
reforms (and other domestic policies supported by Netanyahu and
his right-wing coalition partners, like continued government
subsidies and military exemptions for the ultra-Orthodox)
culminated in a series of protests in the summer of 2011 over the
rising cost of living, housing and food prices, and the
aforementioned subsidies.

Since Adelson doesn’t pay taxes in Israel, Bibi’s market and tax
reforms do not affect him personally, and so unlike his
contributions to Republican candidates in the U.S., who might be
able to affect tax policy (if they were to actually achieve
office) that would benefit him, his investment in Bibi
via Yisrael Hayom cannot be similarly
justified. Clearly, Adelson’s ideological commitment to
either Israeli military and political dominance in the Middle
East and with relation to the Palestinians or to pro-capitalist
market and tax reform (regardless of its personal effect for him)
has been sufficient to justify his commitment of more than $70
million to the cause.

Paradoxically, however, since he has justified his commitment to
Israel on the basis of its ostensible status as the only “liberal
democracy” in the Middle East, Adelson’s meddling in the Israeli
newspaper market, and in its politics, seems rather to have
contributed to the illiberalization of Israel’s democracy.
If one agrees that a democracy cannot survive without a strong
and diverse free press, then Adelson’s Yisrael
Hayom, with its infiltration of the Israeli newspaper market
and one-sided cheerleading for Bibi’s administration, has only
contributed to the weakening of one of the pillars of Israeli
democracy. In addition, the right-wing parties with which
Bibi has maintained a governing coalition (and which promise to
move further to the right after the January elections) have
continued the government’s strong support for the religious
stranglehold on certain aspects of Israeli law governing
marriage, divorce, and the right to worship freely, among other
things, which have caused many people inside and outside Israel
to question whether Israel is indeed a liberal democracy at all,
or rather a democratic theocracy.

In this respect, then, Sheldon Adelson’s financial support for
what he calls “the sole liberal democracy in the region” seems
highly suspect, and his gamble on Israeli politics less like a
gamble than a stake in a style and type of governance in
accordance with a personal ideology that values a capitalist,
theocratic, militarist Jewish state. And unlike his
commitment to Republican candidates in the U.S. in the last
election cycle, Adelson’s investment in Israeli politics is
likely to offer him highly favorable returns come January 22.

[2] In September Ma’ariv had to sell its
printing equipment to make its payroll and was sold the same
month. Ha’aretz, Israel’s oldest daily, sold a 20%
stake in the Haaretz Group to the Russian-Israeli businessman
Leonid Nevzlin and in October, as a result of a strike
protesting layoffs, the paper did not go to press one day,
marking the first time since 1965 that they had missed an
issue.

[3]NPR
reports, “According to a report in Haaretz, Dror Eydar, a
senior columnist at Israel Hayom, receives an additional
salary from the prime minister’s office. And Netanyahu
adviser Nathan Eshel left his job in the prime minister’s
office to work at Israel Hayom during its launch, only to
rejoin Netanyahu’s staff last year.”